New York Markets After Hours

NCR profit surges, beating estimates

NCR Corp.'s NCR third-quarter earnings soared as the company reported continued growth at its financial services and its hospitality segment.

Shares of NCR, which affirmed its 2012 per-share adjusted earnings and revenue guidance, rose 4% to $23.05 in after-hour trading as adjusted earnings topped expectations. Through the close, the stock is up 35% this year.

The company has benefited as U.S. regional banks have upgraded their ATMs. The company also has a growing software business and has been aiming for a stronger presence in emerging markets, such as Brazil.

On Tuesday, rival Diebold Inc. (DBD) again reduced its 2012 guidance as regional banks bought fewer automated-teller machines, in a possible sign of a less-robust market than anticipated without stimulus from mandated upgrades. The company reports its third-quarter results, for which it gave a downbeat view, next week.

On Thursday, NCR reported that core financial services segment, which includes its ATM operations, saw revenue growth of 3% to $791 million, though the pace of growth slowed from the past two quarters.

Sales in its hospitality segment soared to $129 million from $36 million.

NCR reported a profit of $57 million, or 35 cents a share, up from $16 million, or 10 cents a share, a year earlier. Excluding pension expenses, acquisition- and restructuring-related charges and other items, earnings from continuing operations were up at 64 cents from 57 cents. Revenue increased 5.5% to $1.44 billion.

(Updates throughout with further details, context and executive comments from call)

NCR Corp.
NCR, +1.28%
gave its evolution to a more software-based company the lion's share of the credit for strong third-quarter results, in which the ATM and kiosk-maker's earnings more than doubled.

The company said market-share gains in its core financial-services segment had technological differentiation to thank, and margins continued to improve from better software business.

Shares of NCR rose 3.9% to $23.02 in after-hour trading as adjusted earnings were better than expected. Through the close, the stock is up 35% this year, but it has fallen 15% from a four-year high in August before allegations of broken trade embargoes and violated foreign bribery laws came to light.

On a conference call to discuss results, the company said that the Securities and Exchange Commission has served NCR a subpoena as part of an investigation and that NCR is "cooperating fully" with authorities including the SEC. NCR said its internal investigation of the allegations would likely be finished in three to six months.

Recently, NCR shares have also been restrained by a dire report from rival ATM-maker Diebold Inc. (DBD). Earlier this week, Diebold predicted much weaker results than expected in the third quarter and again reduced its 2012 guidance because of a deceleration in regional banks' ATM demand.

However, NCR--which affirmed its 2012 per-share adjusted earnings and revenue guidance--said Thursday its regional bank business was fine.

"We've put a lot of focus on gaining more share in the financial services space, and the team...has executed brilliantly, particularly in Americas and the U.S.," Chairman and Chief Executive Bill Nuti said. Executives later added that NCR "had a good regional mix in the quarter" and that regional bank revenue was flat to slightly up in the period.

Diebold said Tuesday its mix of revenue from regional to national accounts in North America was accelerating faster than anticipated. The news hinted at a less-robust market than thought without stimulus from an ATM upgrade deadline imposed by the Americans with Disabilities Act earlier this year.

But NCR executives said that wasn't what they were seeing.

"In the regional space...you're going to see steady implementation of deposit automation. We are seeing it, we're experiencing it, so it hasn't stopped," Nuti said.

NCR reported revenue in its core financial services segment, which includes its ATM operations, increased 3% to $791 million, or 8% on a constant-currency basis. The pace of growth slowed from the past two quarters, but the segment is lapping more difficult comparisons to strong growth in year-earlier periods.

Overall, NCR reported a profit of $57 million, or 35 cents a share, up from $16 million, or 10 cents a share, a year earlier. Excluding pension expenses, acquisition- and restructuring-related charges and other items, earnings from continuing operations were 64 cents from 57 cents. Revenue increased 5.5% to $1.44 billion.

Sales in its hospitality segment jumped to $129 million from $36 million because the year-earlier period only partiallly included business from NCR's acquisition of Radiant Systems, a ticket-and-merchandise kiosk maker.

Its retail segment saw revenue fall 9.7%, partly because of declines in the Americas and Europe and partly because of a reclassification of some accounts to different segments.

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